PACRA Maintains Entity Ratings of H. Sadar Ali Akhtar Ali (Private) Limited

The ratings incorporate the robust business profile of H. Sadar Ali Akhtar Ali (Pvt.) Limited (hereafter referred to as "HSA" or the Company) represented by its esteemed legacy of excellence and innovation in the leather industry. HSA is a leading manufacturer and exporter of premium-quality leather, offering a diverse range of finished products. With expertise in burnished, waxed, pull-up, oily, and nubuck leather, the Company ensures exceptional materials tailored for various applications. HSA has also expanded into high-end leather goods, including jackets and gloves, further enhancing its product offerings. HSA has strategically expanded its product portfolio by diversifying into the rapidly growing denim segment, reinforcing its position in the industry and capitalizing on emerging market opportunities. HSA proactively targets major leather export markets, including China, Spain, Vietnam, Cambodia, France, and Singapore. For denim exports, the primary destinations include European countries and United Kingdom. The founding family, with decades of expertise, upholds the Company's leadership and legacy in leather. Pakistan's leather industry is segmented into five major categories by value, with leather gloves accounting for ~35%, followed by apparel and clothing at ~30%, and tanned leather contributing ~17%. Overall, the performance of the leather sector in terms of value declined by ~9% in FY24 and was recorded at USD 808.4mln (FY23: USD 887mln). The growth is restricted due to multifaceted challenges, such as a lack of technological advancements, availability of skilled labor, and cheaper-priced alternatives. However, a growing global population, rising fashion trends, and favorable exchange rates for exports offer opportunities. The Company's governance framework can be enhanced through the establishment of a structured board and specialized committees with strengthening independent oversight function. Additionally, a robust internal audit function reinforces accountability and optimizes operational efficiency. During 9MFY25, the Company’s topline increased by ~10% on annualized basis due to slight improvement in price and volumes . However, margins recorded some dilution at all levels due to elevated cost pressure at different levels. The financial risk profile of the company is considered adequate with the comfortable coverages, cashflows, and working capital cycle. The capital structure is moderately leveraged, and the borrowings are mainly comprised of short-term on SBP’s concessionary rates for working capital requirements.
The ratings are dependent on HSA's ability to maintain its position in its specific business niches and sustain growth in the face of challenging industry dynamics. Essential factors include bolstering share capital, achieving consistent revenue growth, enhancing margins, and maintaining prudent financial performance in accordance with projections.

About the Entity
H. Sadar Ali Akhtar Ali (Pvt.) Limited was incorporated in Pakistan on 11th August 1985, under the Companies Ordinance, 1984 (Now Companies Act, 2017). The Company's shareholding has predominantly transitioned to the third generation, ensuring continuity in ownership while capitalizing on deep industry expertise and a long-term strategic vision. Mr. Mian Naeem Akhtar is the CEO of the Company, and his brother Mr. Mian Saleem Akhtar is the Director, both have decades of professional experience. Mr. Ahsan Ali, Mr. Mohsin Ali, and Mr. Hassan Ali (Directors and sons of Mr. Naeem) are actively involved in the business they are well-qualified with ample industry and business experience.